According to an OPIS report, the Brazilian Sugarcane Industry Association (UNICA) has urged EPA to reconsider its proposal to reduce required volumes of advanced biofuels in 2015, 2016, and beyond. "Under the right market conditions," says UNICA, "Brazil can produce an estimated 2 billion gallons of sugarcane ethanol for export to America in 2016." [OPIS, 7-31-15.]

I've been trying to imagine what these "right market conditions" might be:

• A new global commodity price super-cycle, beginning almost immediately, raising world sugar prices back up by 100% or more, so that investment in sugar mills returns;
• Alternatively, a further almost complete collapse of the Brazilian economy (now trailing only Russia in negative growth), reducing domestic gasoline use and somehow setting free a large volume of anhydrous ethanol presently mandated at a 27% domestic inclusion rate;
• A new willingness by EPA to permit US RIN prices to skyrocket, with the D5-D6 premium climbing to say a dollar or so per gallon;
• Or maybe the status quo, continued weak sugarcane production growth with steady domestic gasoline demand--but with the northbound 2 billion gallons of sugar ethanol (needed especially by the California LCFS) matched by 2 billion gallons of US corn ethanol southbound to Brazil.

So far, through May this year, US-DOC data say that only 16.4 million gallons of Brazil sugar ethanol have actually been imported to the US in 2015, via the East Coast, none to California.

Five years ago in 2010, with the 2007-2013 global price super-cycle in fresh bloom, EPA's "Primary Control Case for Projected Renewable Fuels Volumes" called for reaching 30.5 billion Total Renewables in 2022, including 15.0 corn ethanol, 4.92 cellulosic ethanol, 6.52 cellulosic diesel (x 1.5 energy density factor), and 2.24 imported sugarcane ethanol. EPA and many others expected Brazilian sugarcane to be a future "powerhouse" of advanced biofuels, with acreage increasing 50% by 2020.

Word to the wise. EPA will not be thinking about advanced biofuels the way I do, from a kind of "commercial reality" point of view. The Agency will not be allowing for the effects of a "global price super-cycle," as my "episodes" are not used in peer-reviewed macro-economic models. Instead, EPA will be approaching this from the standpoint of "carbon accounting," based on reducing calculated GHG emissions any way possible, even by tiny amounts. More sugarcane ethanol, displacing USA corn ethanol, may well be seen by the Agency as "incrementally beneficial." (In the battle against climate change, they have said, nothing in the 2007 Energy Act directs them to protect US corn domestic use from sugarcane ethanol imports.)

More on Carbon Accounting to come. Register for PRX Summer Seminar August 25-26 here. (For details on Brazil sugar and ethanol supply-demand, go here, to March 2015 Think Piece and podcast, charts updated today).